Analysts: Recent Automotive Job Cuts Are Just the Beginning

Matt Posky
by Matt Posky
analysts recent automotive job cuts are just the beginning

Over the last six months, automakers have announced roughly 38,000 job cuts as part of global restructuring efforts. While such things are typically part of the normal ebb and flow of the industry, the ebb could be a prolonged one as manufacturers seek ways to mitigate the high cost of tech and figure out what their businesses should look like in the 21st century.

A litany of other issues are impacting jobs. China’s economy turned out to be less stable than presumed, trade tensions have escalated in practically every major market that builds cars, and most of the developed world appears to be nearly tapped out in terms of sales growth.

As a result, analysts are growing concerned that the layoffs we’ve seen thus far are just the beginning. But they’re not the only ones. Industry insiders are also willing to admit that times are changing — and rather drastically.

Bloomberg, which has tabulated scheduled layoffs since late last year, did the same for the comments of industry experts attempting to forecast tomorrow. The prognosis could be better.

Let’s start with Ford. Careful not to announce layoffs in lump sums, the manufacturer has promised a 7,000 global staffing reduction as part of its cost-cutting goals. While most of those have been in Europe, with more reported to come focusing on Germany and Ford’s joint operations in China, analyst Adam Jonas of Morgan Stanley said that won’t be nearly enough to reach the stated profit goals of “Smart Redesign.”

“Auto companies globally are contemplating life where global production has greater downside risk than upside,” Jonas wrote in a report on Tuesday. “Ford disclosed that the 7k headcount cuts will save $600 million annually, or an average of $86k per worker … [our calculations] require more than a further 23k salaried headcount reductions.”

For what it’s worth, Ford says it’s doing more than just trying to promote financial fitness amid trying times. It’s changing as a business by moving into electrification, data, mobility services, and all that other tech crap the industry can’t seem to get away from. But it would be unfair to single out the Blue Oval, as most large automakers are doing the same thing to varying degrees.

Daimler’s departing CEO, Dieter Zetsche, said as much while handing over the corporate reins to Ola Källenius this week. “Everything is under scrutiny,” he told shareholders in Berlin on Wednesday. “We cannot and will not be satisfied with the current level of profitability.”

The company has yet to confirm anything, though reports out of Germany claim Daimler could reduce its own headcount by as many as 10,000 employees, and soon. Meanwhile, executives are stressing the importance of improving financial efficiencies.

Dr. Z cited all the usual culprits, specifically the high development cost of new technologies and the fleshing out of Mercedes’ product range, but added that the entire industry is going through a period of change. He said it was up to automakers to prove the change was viable and that electric vehicles must be made profitable to show investors that their money is not ill-placed.

Again, easier said than done. Tesla, for all of its success, has had one hell of a time making EVs work for its bottom line. Its share price has tumbled through 2019. Demand is also down, leading some to believe that this could be a very bad year for the company. However, it’s not just Tesla that needs to worry about sales.

Bank of America Merrill Lynch analyst John Murphy said he believes the entire industry is headed for a “significant downturn,” adding that China’s lackluster performance as a market is leaving many automakers scratching their heads. But, once they’ve stopped, their next move could be issuing more pink slips — as there likely won’t be enough cash leftover to pay for mobility projects, R&D, and non-essential employees.

[Image: Daimler AG]

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  • Volvo Volvo on May 24, 2019

    The technical obsolescence you talk about is not a flaw but a feature.

  • Buickman Buickman on May 25, 2019

    effective marketing will separate winners from losers

    • See 2 previous
    • Mcs Mcs on May 26, 2019

      @SuperCarEnthusiast From Chevy Blazer Ad: "It looks like a piece of candy" "This is my sexy mom car" "I would feel like a cooler dad" "I don't know who they got to design this but give them a cookie and a star" Makes you want to run out and buy one. To be honest, I think the ad insults peoples intelligence. Do they think people are so stupid that they'll run out and buy one after seeing that ad? Does the thing really look like it would make you sexier or cooler?

  • Aidian Holder I'm not interested in buying anything from a company that deliberately targets all their production in crappy union-busting states. Ford decided to build their EV manufaturing in Tennessee. The company built it there because of an anti-union legal environment. I won't buy another Ford because of that. I've owned four Fords to date -- three of them pickups. I'm shopping for a new one. It won't be a Ford Lightning. If you care about your fellow workers, you won't buy one either.
  • Denis Jeep have other cars?!?
  • Darren Mertz In 2000, after reading the glowing reviews from c/d in 1998, I decided that was the car for me (yep, it took me 2 years to make up my mind). I found a 1999 with 24k on the clock at a local Volvo dealership. I think the salesman was more impressed with it than I was. It was everything I had hoped for. Comfortable, stylish, roomy, refined, efficient, flexible, ... I can't think of more superlatives right now but there are likely more. I had that car until just last year at this time. A red light runner t-boned me and my partner who was in the passenger seat. The cops estimate the other driver hit us at about 50 mph - on a city street. My partner wasn't visibly injured (when the seat air bag went off it shoved him out of the way of the intruding car) but his hip was rather tweaked. My car, though, was gone. I cried like a baby when they towed it away. I ruminated for months trying to decide how to replace it. Luckily, we had my 1998 SAAB 9000 as a spare car to use. I decided early on that there would be no new car considered. I loathe touch screens. I'm also not a fan of climate control. Months went by. I decided to keep looking for another B5 Passat. As the author wrote, the B5.5 just looked 'over done'. October this past year I found my Cinderella slipper - an early 2001. Same silver color. Same black leather interior. Same 1.8T engine. Same 5 speed manual transmission. I was happier than a pig in sh!t. But a little sad also. I had replaced my baby. But life goes on. I drive it every day to work which takes me over some rather twisty freeway ramps. I love the light snarel as I charge up some steep hills on my way home. So, I'm a dyed-in-the-wool Passat guy.
  • Paul Mezhir As awful as the styling was on these cars, they were beautifully assembled and extremely well finished for the day. The doors closed solidly, the ride was extremely quiet and the absence of squeaks and rattles was commendable. As for styling? Everything's beautiful in it's own way.....except for the VI's proportions were just odd: the passenger compartment and wheelbase seemed to be way too short, especially compared to the VI sedan. Even the short-lived Town Coupe had much better proportions. None of the fox-body Lincolns could compare to the beautiful proportions of the Mark was the epitome of long, low, sleek and elegant. The proportions were just about perfect from every angle.
  • ToolGuy Silhouetting yourself on a ridge like that is an excellent way to get yourself shot ( Skylining)."Don't you know there's a special military operation on?"